1 April 2017 Volume 42 Issue 4 THE UTAH TAXPAYER A Publication of the Utah Taxpayers Association If Congress Acts, What Will APRIL 2017 Volume 42 Federal Tax Reform Look Like? With Congress’s failure to repeal and replace the Affordable If Congress Acts, What Will Care Act, attention in Washington, D.C. appears to be turning Federal Tax Reform Look towards federal tax reform. This is a needed change as the Like? Page 1 United States has not seen any comprehensive tax reform since My Corner: Employed by 1986. The nation’s economy has evolved since the 1980’s and Page 2 Utah’s Tax Watchdog for 40 the tax code needs to be reformed to match the economic Years activity of today’s world. Page 2 Currently the federal tax code imposes high marginal rates on 2017 Legislative Session: A both businesses and individuals. According to the Washington, Page 4 D.C. based Tax Foundation, the United States has one of the Mixed Bag of Success, Tax Increases Page 5 highest corporate income tax rates in the world. Significant tax reform would be targeted at lowering those rates. The struggle 2017 Legislative Scorecard for the reform will be how to do it such that it best benefits the Released, 34 “Friend of the United States overall. Taxpayer” Awarded Page 7 The U.S. tax system is complex. The Tax Foundation has stated that individuals spent 8.9 billion hours complying with Utah’s Income Tax Rate the Internal Revenue Tax Code in 2016 and figures that the Ranks Second Highest total cost for tax compliance in 2016 was $409 billion. Among Neighboring States Making any change to this system will be difficult because of Page 8 the complexities involved with our current system. Your Association One key goal for Congress in this reform should be to find a Accomplishments way to simplify the code so that individuals are spending less in March time figuring out how to comply… (continued on page 4) Page 10 Save the Date for the Taxes Now Conference and “Teed Off on Taxes” Golf Tournament Association Staff The Utah Taxes Now Conference is scheduled Thursday, May Howard Stephenson President 18th, 2017 at the Grand America Hotel, beginning at 8 am. You can Billy Hesterman Vice President keep updated on the speakers for this event at Spencer Nitz Research Analyst www.utahtaxpayers.org. Bren Robinson Executive Assistant Executive Committee Next, “Teed Off On Taxes” Golf Tournament on Thursday, June 8, 2017 at the Eaglewood Golf Course in North Salt Lake. Mike Edmonds Chairman Sponsorship opportunities are available. Morris Jackson Vice Chair Bobby Rolston Secretary Brice Arave Treasurer Space is limited at both of these events. Contact Bren Robinson at Keith Pitchford Legislative Chair [email protected], click here to register by clicking here, or call (801) 972-8814 for details, and to reserve your spot! 1 www.utahtaxpayers.org 12 April 2017 Volume 42 Issue 4 My Corner: Employed by Utah’s Tax Watchdog Organization for 40 Years rate, they must send a mailed notification to each This year marks my 40th year taxpayer, print a quarter-page “tombstone” of employment at the Utah newspaper ad and hold a public hearing in which Taxpayers Association which I elected officials are required to take the heat from began on April 1, 1977. I was citizens regarding their proposed property tax hikes. hired fresh out of BYU’s This law has done more to curtail irresponsible master of public property tax increases like I had seen in the early 80s administration program. Since than anything in Utah’s history. At the time the law Memorial Day was coming up, was passed, Utah ranked 24th highest among the 50 Association President my boss, Jack Olson, assigned states in the percent of personal income taken by Howard Stephenson me to do research on the cost property taxes at 3.54%. Today, we rank 34th at of burial at Salt Lake County’s 2.64%. cemeteries. We released the report on Memorial Day In 1987 in the wake of a budgetary crisis, the biggest weekend and Jack assigned me to do all of the press state tax increase in Utah’s history was passed with interviews on the report. I remember seeing my name the support of Governor Bangerter and the Republican in the newspaper stories and hearing my voice on the legislature. This $202 million tax increase was brought radio and realized for the first time the weight of the on by unsustainable spending growth, accompanied Taxpayers Association’s role in looking out for by a downturn in Utah’s economy. These tax increases taxpayers. caused a taxpayer revolt, that led to three separate tax One of our first battles involved opposing Salt Lake related ballot initiatives being proposed. Your City’s 8 percent utility franchise tax. The Association Taxpayers Association threw its support behind fought the proliferation of utility franchise taxes, Initiative A, which would have imposed a meaningful achieving legislation, which placed a 6 percent cap on spending limitation law. All proposed measures failed this new backdoor approach to taxation. due to a promise made by Governor Bangerter that if During the 70s we also took on sometimes bitter battles re-elected, he would see that tax limitation would be with local entities trying to pass bond proposals or tax enacted by the legislature. The spending limit has increases on the ballot. The Association’s tax alert been modified over the years to be virtually system proved itself in getting informed grassroots meaningless. involvement in local issues. In 1992, I received permission from the Association’s Each year at local budget time, I would travel the board of directors to run for the Utah State Senate. I entire state visiting with county officials in November was in a gerrymandered district left from redistricting and school district officials in May and June. At that that went all the way from Cedar Hills in Utah County time, there was no rhyme or reason in state law as to up through Alpine, Highland, Lehi, Draper, Sandy how property tax rates were to be set by local taxing and finally ended at Midvale Center Street. A 10-year entities. I worked with my boss Jack Olson to get incumbent House member decided to run as my legislation to tie property tax rates to budgeted Republican challenger five minutes before the filing property tax revenues. However, this did not stop local deadline. The Utah Education Association (UEA) and governments from simply budgeting for more property the Utah Public Employees Association (UPEA) tax revenues, yielding massive windfalls as property assured him financial backing and a guaranteed tax values reflected the inflation of the 80s. victory. In those days a candidate needed 70% of the In 1986, the Association was successful in passing delegate votes at convention to avoid a primary. I got Utah’s current Truth-In-Taxation law to bring property 69.5% of the vote and had to face a grueling primary taxes under control. This law requires the certified contest, where I won by a similar percentage as the property tax rate to be calculated based on the prior convention result. The district was heavily year’s actual revenue with no adjustment for inflation. Republican, so I won in the November election. When a taxing entity chooses to exceed the certified Once elected, one of the first bills I passed was what 2 www.utahtaxpayers.org 43 April 2017 Volume 42 Issue 4 later came to be known as “Paycheck Protection.” This microchip company from Boise, Idaho was looking at law would prohibit state and local government from locating a major plant in either Utah or Nebraska, and collecting political contributions for public employee eliminating the manufacturing sales tax on inputs was and teacher unions. The American Legislative essential to Utah winning that bid. This brought the Exchange Council adopted my proposal as model Micron facility to Utah. Unfortunately, the legislature legislation. A few states enacted “Paycheck Protection” later eliminated the exemption on machinery and statutes, including Utah, but the unions got the laws replacement parts which last less than three years. struck down in federal courts. Your Taxpayers Since then, many states have followed Utah’s lead but Association filed an Amicus brief in an Idaho case don’t impose the three-year-life penalty. Your which was before the U.S. Supreme Court. The Association continues the work of convincing the Supreme Court finally ruled that government has no legislature that this penalty must be eliminated to business collecting PAC money for public employee ensure Utah is competitive. and teacher unions. Consequently, the UEA political For its 95 years and my 40 years, the Association has action committee, which was once the largest been a supporter of keeping government out of the contributor to governor and legislative races is not even in the top ten contributors now, giving elected “But most of all, I am grateful to officials less fear of the union. Having worked to fight tax proposals on the ballot I our many members’ whose wondered why local governments and school boards support over the years has could set special elections on any day of the year. So I sustained the Association and worked to get legislation passed which would limit allowed us to continue to do this special elections to five specific dates each year including the regular November election day. A important work.” freshman legislative colleague was critical of the fact that we allowed more than the November regular business of business, encouraging privatization of election date, he later sponsored legislation and was government services and working to defeat proposals successful in limiting these questions to the November for government to engage in enterprises which can be election.